Transit Trade Best Practices: Legal Frameworks, TIR Carnets, and GCC Customs Union

Transit shipping is one of the key systems followed by customs departments worldwide to facilitate the transfer of goods between regions without paying customs duties, taxes, or other fees except service charges. This guide outlines Dubai Customs' best practices based on international standards.

What is Transit Trade?

Transit trade allows businesses to move goods through a territory without paying import duties, avoiding delays from inspection requirements and reducing overall transport costs. Dubai Customs has implemented comprehensive measures based on international best practices to ensure the quickest clearance at the lowest costs.

1. GCC Customs Union Framework

The GCC Supreme Council approved the launch of the Customs Union, fundamentally changing how transit operates within the region:

Single Economic Unit: GCC countries are treated as one economic unit for transit purposes, following international treaties.

End of Internal Transit: Transit shipments between GCC member states are no longer applicable since the Union was established.

First Entry Point Rule: Transit status for goods imported to GCC states ends at the first customs entry (sea, land, or air), where normal inspection and duties apply.

Last Exit Point Rule: Transit for exported or re-exported goods starts at the last customs exit in any GCC member state.

Free Movement: Goods imported to any member state can transfer to another member state after customs procedures without restrictions.

Restricted Goods Protocol: Special policies apply for restricted goods moving between member states to ensure proper delivery.

2. Arab League Transit Agreement

The agreement facilitates shipping between Arab countries:

Scope: Applies to goods, personal belongings, and transportation units of any origin passing through contracted parties' territories.

Coverage: Includes goods whether transferred between transport units, stored in warehouses, or with changed transportation methods.

Full Transfer Definition: Transit that starts and ends outside the country of passage, with destination in a contracted party.

Port Access: Member countries can use ports of other members for importing and exporting when possible.

Exclusions: Armaments, weaponry, and military missions are excluded from this agreement.

3. TIR Convention (International Road Transport)

The TIR Convention, concluded in 1975 under UN auspices and effective since 1978, simplifies international road transport:

Scope: Applies to road transport without intermediate re-transport, through vehicles or containers, crossing one or more borders.

Duty Exemption: Transported goods are not subject to import or export taxes at intermediate customs points.

Sealed Containers: Goods must be in sealed truckers, convoys, or containers that can be inspected at entry points.

Inspection Rights: Customs authorities can inspect goods if violations are suspected.

TIR Carnet Types:

Regular TIR Carnet - Standard operations

Standard TIR Carnet - Common use

Alcohol and Tobacco TIR Carnet - Special goods

Each carnet contains two copies: one for the departure country and one for the final destination.

TIR System Advantages:

Minimal customs procedures at borders

Reduced transit costs and delays

Unified, easily obtained documentation

No financial guarantees required at transit borders

4. GCC Common Customs Law (Articles 67-73)

Key provisions governing transit:

Route Authorization: Transit operations can only be completed at authorized customs offices through specified routes.

Simplified Declaration: No detailed declaration required at ports of entry when goods transport between customs offices.

Duty Suspension: The Director General can issue resolutions suspending customs duties for transit transport.

5. Dubai Customs Policy No. 35 of 2011

Specific procedures and conditions:

Definition: Transit allows goods to move under Customs control from departure to destination office within a specific period without paying duties, provided cash or bank guarantees are deposited.

Transit Period: Goods must be transported and delivered to the exit customs office within 30 days from declaration date.

Departure Requirements: Goods must depart to their final destination with supporting documentation submitted.

Transport Conditions: Specific requirements apply for different transportation means.

Vehicle Standards: Conditions must be satisfied by transport means used in transit.

Customs Seals: Policy sets requirements for proper sealing.

Exit Procedures: Defined customs procedures apply at the port of exit.

Risk Management in Transit

Dubai Customs employs advanced risk management systems to balance security with trade facilitation, using technology to identify high-risk shipments while expediting compliant cargo.

Authorized Economic Operator (AEO) Benefits

AEO-certified traders enjoy enhanced privileges for transit operations, including reduced inspections, faster processing, and simplified procedures based on their compliance record.

Financial Guarantees

Transit requires deposit of cash or bank guarantees equivalent to payable customs duties. Clear refund procedures ensure prompt return of deposits upon successful transit completion.